ROI and College Rankings, evaluating higher education

The 2013 Payscale College Rankings were released a few weeks ago, reigniting a debate about the state of our higher education system. Payscale, not surprisingly, finds that engineering schools offer the best return on investment (ROI), while schools you have probably never heard of have the worst. Another (non) shocker, business, engineering and computer science majors get a higher return than English majors. Should those about to enter college rely on these numbers? Is this the best way to evaluate a school?

Concerns over methodology have been raised before and I will just touch on them briefly before moving on. The highlights: the numbers are based on self-reporting; include only full-time employees and not contract, freelance, self-employed, etc; and exclude graduates who received advanced degrees (lawyers, doctors, MBAs, etc). The latter two concerns will skew the data in predictable ways. Creative majors, such as English and Art, may be more likely to freelance or be self-employed, while business people and engineers don’t need advanced degrees to start a career. This just means that if you are looking for a traditional company job your odds are better if you focus on gaining the credentials in the fields they typically recruit from.

Payscale assumes that your primary objective when choosing a school is to increase your wealth, despite the fact that this is not what colleges claim to do. After a brief, and completely non-scientific, survey of college mission statements I could find none that mentioned financial gain for their students as a goal–not even University of Phoenix, which appear pretty utilitarian on tv. The University of Virgnia’s central purpose is to:

…enrich the mind by stimulating and sustaining a spirit of free inquiry directed to understanding the nature of the universe and the role of mankind in it. Activities designed to quicken, discipline, and enlarge the intellectual and creative capacities, as well as the aesthetic and ethical awareness, of the members of the University and to record, preserve, and disseminate the results of intellectual discovery and creative endeavor serve this purpose.

Where is my place?This fits with the historic role of higher education aimed at enlightening elites. The model where college is the place you go to expand your horizon and connections before taking over the family business or landing a job through one of those new found connections. It is all about cultural and social capital rather than economic. UVA is a very traditional, traditional 4-year college.

Jefferson, probably not calculating ROI at UVA.

But even Harvey Mudd, the top-ranked in Payscale’s study, fails to mention economic capital in their mission:

…to educate engineers, scientists, and mathematicians well versed in all of these areas and in the humanities and the social sciences so that they may assume leadership in their fields with a clear understanding of the impact of their work on society.

Like most four-year schools, Harvey Mudd purport to create well-informed citizens and future leaders. In fact, Payscale’s winning major (business) was actually found to be the major with least gain in critical thinking skills while the majors with the lowest ROI (liberal arts) have the highest gain. Critical thinking skills are not a perfect measure for “understanding one’s role in society or the universe” but it is arguably better than salary. Do you know of any ranking of schools that measure the outcomes colleges claim to generate, such as leadership, self-awareness, or even critical thinking?

Of course the ideals of college education are different from the reality. The reality is that college is expensive and is a financial investment. One hopes that enlightenment and financial gain are not mutually exclusive, but which is the greater goal depends on the individual. There are many things to consider before paying the ever increasing tuition bill–including employment, graduation rates, loan defaults, etc. An informed decision involves seeing beyond the perks that drive up tuition, the oversimplified and skewed ROI models, or even the popular (if useless) US News & World Report rankings. Prospectives would be well-advised to consider the college’s mission as well as their own when making a decision.

Think the offer’s still good?

Also, to remember that a traditional four-year college is not the most common and is obviously not for everyone. I am not alone in worrying that “college isn’t for everyone” can lead to a return to college as playground for the rich and further entrenchment of class divisions. But, the people viewing traditional residential 4-year colleges through the cost/gain lens are probably looking in the wrong place. Payscale’s rankings would be more useful in understanding vocational schools, which there are not enough of in the United States, and professional schools. But Payscale can’t help you decide whether to take out loans for a particular law, business, or medical school, which would in turn enable you to get the jobs that Payscale ranks as both meaningful and well-paying.